In the "Monthly views – Equities Government bonds Commodities Credit", the state of various primary asset classes is examined. The main theme revolves around the present outlook on equities, government bonds, commodities, and credit. The text suggests a neutral stance
The author reflects on their personal and professional journey so far this year, emphasizing the importance of a learning mindset in both parenting and investing. Using their experiences and errors as stepping stones, they explain the constant need for humility
According to the International Labour Organisation (ILO), modern slavery, including forced labor, child labor, human trafficking, debt bondage, and forced marriage, affects over 49 million people globally. This alarming situation has been exacerbated by the COVID-19 pandemic's disruption of global
Schroders, in their report "Commodities: A Structural Allocation for the Next Decade?" explores the heightened relevance of commodities in the changing economic landscape. Noting that commodities emerged as one of the few winners in 2022 amidst widespread asset value declines,
The original document titled "Regime shift: How exposed are corporate bond issuers to higher interest rates?" investigates the impact of increased interest rates on corporate bond issuers. Despite the surge in interest rates over the past year, the corporate bond
Schroders' "Climate change and cities: Adapting real estate investment decisions" advocates for a novel approach in assessing physical climate risk, urging the real estate sector to infuse this aspect into their financial decision-making. The research posits that an innovative blend
2023 is shaping up as a robust year for major developed markets, primarily driven by increasing valuations amidst weak earnings. European equities, in particular, have seen almost a 17% uptick in USD terms by the end of April. However, emerging
Incorporating Climate Change: 30-Year Forecasts for Asset Class Performance and Returns This paper, titled "Long-run asset class performance: 30-year return forecasts," discusses Schroders Economics Group's annual thirty-year return forecasts for a range of asset classes, incorporating the impact of climate
In the midst of market turbulence, the banking sector faces challenges reminiscent of the Global Financial Crisis and the dotcom bubble. The author of "CIO lens" by Schroders highlights the importance of learning from past experiences while also considering the
Long-run asset class performance: How climate change will impact asset returns – an update Incorporating the impact of climate change, Schroders Economics Group presents a 30-year return forecast for cash, bonds, credit, equities, and real estate. This analysis utilizes Oxford
In Schroders' "Equity Lens," the main theme highlights the strong market performance during the first quarter, led by Europe ex UK with a 12.2% gain in USD terms, despite weak earnings. The text also emphasizes elevated valuation-dispersion among companies and
Main theme: The text discusses the recent rise in corporate bond spreads, higher yields offset by lower risk-free yields, and increased default rates in the high-yield sector, and the risk to corporate margins due to increasing costs. Corporate Bond Spreads
Inflationary pressures mean monetary policy must be tighter and more restrictive than it has been in the recent past. Higher for longer interest rates will be an important feature of a new regime in policy and market behaviour. The global
This report highlights the evolution of Chinese assets and investors’ allocations to the region. Observation 1 shows that investors outside China have low allocations to the country, with variations depending on their location and investment strategy. Chinese equities and bonds
March 2023 2022 was certainly a tumultuous time for investors. The year was dominated by the Federal Reserve’s actions to fight inflation, particularly given the widespread perception earlier in the year that it was behind the curve. US Core inflation stood
Strategic Research Unit Summary 3 The strong start to 2023 for emerging market (EM) equities faded in February. The China re-opening rally lost steam, and was exacerbated by re-escalation in US-China tensions. Meanwhile, more resilient US macroeconomic data raised the
For almost a century mutual funds have provided a simple and effective solution for investing: delegation to professionals, diversification through pooling of client assets, and security through a regulated legal structure. But times are changing, and so is the way
Economic and Strategy Viewpoint Q1 2023 Upgrade to global growth as developed markets hold up and China reopens. After what has felt like a constant period of negative economic shocks and forecast downgrades as the world has lurched from one
We maintain our neutral stance on equities as although peaking interest rates take some pressure off valuations, risks remain
In focus Cyber risk is one of the most immediate and financially material risks that organizations face today. Those that fail to implement robust management on cybersecurity may be less resilient in the long term. In this paper we undertake
We expect more active fiscal policy to be one aspect of a new regime in policy and market behaviour as governments attempt to alleviate the effects of higher inflation through tax and spend policies. This note explores the challenges and
Valuations continue to favour ex-US markets Summary Markets have rallied hard in early 2023, on relief at China re-opening and on expectations that there will be a softer economic landing than previously feared in the developed world (slide 9) Europe’s
After the recent rally and downward revisions to 2023 earnings expectations EM equities are no longer cheap on a forward P/E basis. The price-book ratio is close to its historical median. On a dividend yield basis, EM remains cheap versus
Schroders Economics Group produces thirty-year return forecasts on an annual basis, which incorporates the impact of climate change. This is Part 1 of our paper where we outline the methodology used to incorporate climate change into our return assumptions. In
Economic and Strategy Viewpoint The coming year is expected to be one of recession for the advanced economies with the eurozone now expected to join the US and UK in recording a fall in output for 2023 as a whole.
In 2020, our assumption started to incorporate the impact of climate change and the energy transition. Each year, we have developed the supporting analysis, and for this year’s update, our central case has moved to the Delayed Transition scenario following
It’s a gloomy time of year in more ways than one at the moment. Even the excitement of my recent move to a new house can’t distract from the literal and figurative darkness of January 2023. The war …
The macroeconomic backdrop, and regime shift, created a challenging environment for EM assets in 2022. Slowing economic growth, accelerating inflation, exacerbated by Russia’s invasion of Ukraine, and tighter global financial conditions were all headwinds. EM local and dollar debt both
The macroeconomic backdrop, and regime shift, created a challenging environment for EM assets in 2022. Slowing economic growth, accelerating inflation, exacerbated by Russia’s invasion of Ukraine, and tighter global financial conditions were all headwinds. EM local and dollar debt both
The Schroders Multi-Asset long-term capital market assumptions are forwardlooking estimates of total returns which are an important component for the team’s strategic asset allocation modelling and portfolio construction. This note presents our latest 10-year capital market returns forecasts in local
2022 summary: the combination of rising risk-free yields and wider spreads resulted in the worst year in IG credit since at least 1970s. History suggests a better …
Last year saw a reversal of many of the past decade’s trends: – the US (-19%) was one of the worst performing markets, the UK was one of the best (+7% in GBP, -5% in USD) (slides 10-11) – growth
Year-to-date, EMEA markets have taken a hit, while several Asian EM, including China, lag the index. Conversely, commodity-producing Latin American and Middle Eastern markets have been the top performers. After the recent rally, and downward revisions to 2023 earnings expectations,
European senior secured leveraged loans are a growing and integral part of the leveraged finance universe. They offer a 10% yield, have positive exposure to rising interest rates (unlike most fixed income), offer credit protections to manage downside risk, and
The coming year is expected to be one of recession for the advanced economies with the eurozone now expected to join the US and UK in recording a fall in output for 2023 as a whole. The emerging markets have
The world has woken up to the vital role that nature plays in supporting our economy and society. With more than half of our global GDP dependent on the natural world, 1 we believe that the reality is stark: nature
Credit spreads have narrowed again, especially in the US. Valuations remain more compelling in European credit. While US HY index spread has narrowed, lowest-rated CCC bonds are underperforming and dispersion between issuers is rising. Rising risk-free yields and wider spreads
Latin America is a region which has long offered promise for investors, but which has seen equity performance disappoint over the last decade. The share of Latin American markets in major equity indices over this period has shrunk, as investor
Schroders CIO Lens: At the beginning of the summer, I asked the question “are we there yet?”, in relation to whether it was time to start thinking about taking on more investment risk. The answer then was no. At that
The 2022 Schroders Institutional Investor Study confirms once again how European investors have made sustainability an integral part of their activity, ahead of the global average in the race to net zero, regulatory agenda, and commitment to their role in
This is very new for younger investors. Interest rates are rising at an alarming pace, as central banks admit that inflation is no longer just a series of transient shocks, but there is a risk that it becomes more ingrained.
Summary Hard currency emerging market debt (EMD): – Valuations vary: 1. The spreads of investment grade (IG) sovereign and IG corporate indices are close to their historical medians. High yield (HY) corporate index spreads have inched slightly above the historical
Global equities fell in Q2, extending year-to-date declines. The MSCI World Index returned -16.2% in Q2, taking the YTD fall to -20.5%. The market backdrop remained dominated by concerns over higher inflation, rising …
T o anyone who ever travels with children, the incessant question “are we nearly there yet?” will be a familiar refrain that punctuates any long distance car journey. It’s certainly a favourite of my seven-year old daughter. Now, I find
Inflation at levels not seen for 40 years. We expect the Federal Reserve (Fed) in the US to continue to tighten policy aggressively and further increase the federal funds rate target range.
Alongside the terrible human tragedy that has unfolded since Russia’s invasion of Ukraine, the war has also exaggerated many pre-existing trends. Some include the upward pressure on commodities and further disruptions to global supply gains at a time when inflationary
The peak in global inflation is probably not far away, but there are several reasons to think that it will fall relatively slowly. Lockdowns in China have caused bottlenecks in global supply chains to re-emerge, upside risks to commodity prices
For over two decades, the 60/40 equity-bond portfolio has served investors well as stock prices have risen and interest rates have fallen. However, the simultaneous sell-off in both asset classes this year has challenged this model. Looking ahead, we believe
Multi-Asset Investments Monthly views Given “stagflationary” concerns, our outlook remains cautious, with a preference for quality in developed markets. Stagflation describes a combination of slowing growth and accelerating inflation.
Economic and Strategy Viewpoint Q2 2022 – The peak in global inflation is probably not far away, but there are several reasons to think that it will fall relatively slowly. Lockdowns in China have caused bottlenecks in global supply chains
